INVESTMENT SUBCOMMITTEE
MEETING MINUTES

Date: October 21, 2010 Time: 2:00 p.m.
_x Regularly Scheduled __ Special
Attendees: Was a quorum present? Yes
Commission Other Attendees
Charlie Casella Anthony Camp ING
Robert Baus Christine Hurtsellers ING
Steven Greatorex Albert Hancock ING
Linda Yelmini Sean Banai ING - by telephone
Jeff LaFave - ING

Comptroller's Office
Thomas Woodruff, Director, HPBSD
Margaret Haering, Assistant Director, HPBSD
Helen Kemp, Asst. Director, RSD
Jeanne Kopek, Asst. Director, RSD

Matters Discussed:
Matters Discussed: Committee members discussed with ING the recent Arbitration Award, which allows ARP members to use their plan funds to purchase retirement benefits from the State Employees Retirement Plan
(SERS). Linda Yelmini advised that the time limits for making an election to purchase may be extended beyond the current 12/31/2010 deadline.

ARP members currently have around $238 million invested in the Stable Value Fund. ING indicated that it needs to be involved in the planning for mass transfers so that it can manage the impact of potential withdrawals on stable value fund management. ING was asked to explore the addition of a money market fund to the ARP to be used as an interim vehicle for members electing to purchase time in SERS.

There was discussion of the impact of transfers from the Stable Value Fund to SERS and the need to prevent an adverse impact upon the crediting rate for members who remain invested. Tony Camp indicated that he wished to review possible methods that could be employed to reduce the impact that such withdrawals will have on remaining plan participants. Tony also mentioned that such withdrawals would constitute an employer event that could give ING the right to terminate the contract; however, he added that such action would be unlikely given the plan's high market to book ratio.

Christine Hurtsellers provided her analysis of economic factors affecting fixed income markets and the performance of the Stable Value Fund. Both the Core Plus and the Intermediate Aggregate portfolios exceeded their benchmarks for the 3rd quarter of 2010. Sean Banai reviewed the asset allocation strategy being pursued by ING. Tony Camp updated the Committee on the Dodd-Frank study, which will determine whether or not stable value funds will be subject to regulation as swap contracts.

Materials Reviewed: ING Presentation on Stable Value Fund

Decisions voted upon: None.

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